They say great ideas come on a full stomach. No one says that with higher conviction and story to back it up than Krasimir, the co-founder and managing partner of TokWise. He takes me back to a cold November day in 2017 and a meal they can now all point to, as the eureka moment.
It all started with a simple question. “Krasimir, what have you heard about the internet of energy?”. It wasn’t unusual for Julien, who later co-founded TokWise, to pose such questions to Krasimir during their lunch breaks. The two were working together for almost a decade in a technology and digital transformation services company. They often engaged in talks about industry trends. But this time, it was different.
The energy production and trading industry is undergoing the same transformation as the one started in commercial banking 15-20 years ago, Krasimir tells me. In both cases, digitization and optimisation can have tremendous effects on operational efficiency and the bottom line of producers and traders alike.
Nevertheless, adoption of digital technologies has tended to be slow. Until a sudden turning point, that is. And the myriad of neo-banks, challenger banks, bringing the frontier of the industry forward, squeezing the margins, and pushing the need for faster innovation. The team behind TokWise believes the same tipping point will come to their industry. And they want to be there, when it happens, leading that frontier. And, indeed, their timing couldn’t be better. The EU targets renewable energy sources to represent 40% of gross electricity consumption by 2030. The European Commission has outlined a 1 trillion-euro estimation of investments that will be put forward for reaching the objective of carbon-neutrality by 2050.
Krasimir and Zhulian were determined to bring their digital transformation experience and knowledge into renewable energy production and trade, but they lacked a key component of their team - their technical counterpart. This is when they turned to Krasimir’s school friend Vassil and the co-founding team was complete.
So Much Power
During a hot summer day, Krasimir and Vasil were at our first office on Shipka street. Right from the get-go, their seasoned professional service approach was evident. Structure and process orientation were radiating from their pitch.
The team explained that they’re addressing the problem of growing volatility on the energy markets. They elaborated how their technology solution helps energy market participants connect their physical assets with the market and become more efficient in the commercialization of renewable energy. In simpler terms, better balancing of supply and demand and access to markets of renewable energy production.
Vassil Vassilev and Krasimir Kolev
One of the biggest challenges of renewable energy is reliability and capacity stability. A thermal power plant is reliable because it can produce a certain amount of energy in a certain amount of time with a high degree of precision. If more energy needs to be produced, more coal gets burned. Should less energy be needed, less coal is burned. The same logic applies to most traditional energy producing sources. Their capacity is, both, fully predictable and controllable.
Whether a renewable power plant relies on the sun or the wind for its energy production, they share the same problem. Both energy sources are highly unpredictable and uncontrollable. One can control the sun rays, the clouds standing between them and the surface of our planet, the wind direction or speed with the same amount of accuracy, or lack thereof.
Solutions to this problem tend to gravitate towards two main directions. One is aimed towards storage. If a battery is placed between the production plant and the general energy distribution network, one implements a lever of control. Should more energy be produced than there is need for in the network, it gets stored in the battery. If less energy is produced than currently needed, energy from the battery gets deployed.
The second one focuses on improving the predictability of production and the ease of access to information, through the use of data science and the integration of multiple data sources.
Energy markets and regulations bring an extra emphasis on the need for better predictability, as producers and traders have to submit quotes of energy that they are going to place on the market to buyers. That information is crucial for a market to keep a balance between what is being sold and bought. Should a seller of energy deliver less or more energy to the market they bring imbalance to the system, which gets penalized through mechanisms that vary from market to market.
It turns out, that imbalance to the system in Europe has caused 4-billion-euro worth of losses for 2018 alone. And this is the problem that TokWise is addressing.
After a few meetings and a deeper dive into the growth hypothesis, technology viability, team dynamics, and a stable sales pipeline, we decided to lead their seed round. Moreover, we were fortunate to have a fantastic co-investor on board in the face of EIT InnoEnergy and Michal Bajda along for our journey.
Carbon neutrality is not a problem that is solved by one solution. There isn’t a panacea that would allow us to live our lives exactly like we used to. A single source of energy that cancels out all our behaviour affecting long-term temperatures and weather patterns does not exist.
While government and pan-government efforts are shifting our strategic focus and investment into the fight for carbon-neutrality, we have seen wonders come to fruition from entrepreneurs and startups in the last very few decades. We have seen the rise of electric cars, seemingly out of nowhere, with 2021 seeing 6.6 million units sold internationally, compared to 130 thousand in 2012. The share of e-cars has jumped to close to 10% of total car sales in 2021, compared to 2.5% in 2019. Driving is just one example. Our daily polluting habits have shifted substantially by the use of ever-more-efficient electrical appliances, led lights, second-hand clothing, refurbished consumer electronics, e-bikes, and countless other products and services we often aren’t even aware of.
We often fail, however, to consider where the power to charge an electric vehicle or produce goods or services comes from. Supply chain carbon neutrality is more and more subject to scrutiny, transparency, and optimisation.
And it all starts with green energy production. It all starts with maximizing that value. We at Vitosha support TokWise’s vision to do just that.